Key Details About Nigeria’s Domestic Dollar Bond

The Federal Government of Nigeria has successfully issued a $500 million domestic dollar bond with a 9.75% interest rate. Here’s what you need to know:

1. Minimum Investment

• The minimum investment amount is $10,000, with additional investments in increments of $1,000.

1. Interest Rate

• The bond offers an interest rate of 9.75%, paid semi-annually. For a $10,000 investment, this equates to $487.5 in interest every six months for five years, with the principal returned at the end of the term.

1. Issuance Purpose

• This bond is part of a $2 billion program, issued in four $500 million batches. It aims to support infrastructure development, promote financial inclusion, and strengthen the domestic securities market. The proceeds will be invested in key sectors of the economy, pending presidential approval and National Assembly appropriation.

1. Eligible Investors

• The bond is available to Nigerians, non-Nigerians residing in Nigeria, Nigerians in the diaspora, and Qualified Institutional Investors.

1. Issuance Duration

• The offer was open from August 19 to August 30.

1. Bond Tenor

• The bond has a tenor of five years.

1. Tax Benefits

• Interest earned on the bond is exempt from Company Income Tax, Personal Income Tax, and Capital Gains Tax.

1. Investment Advantages

• Local investors can benefit from higher returns compared to interest rates on domiciliary accounts. For Nigerians in the diaspora, it offers better returns than those available in their countries of residence.

1. Risk

• Government securities are considered risk-free due to the backing by the government.

1. Listing
   • The bond is listed on the Nigerian Exchange Limited (NGX) and the FMDQ OTC Securities Exchange Limited.
2. Financial Advisers and Issuing Houses
   • The issuing houses include Meristem Capital Limited, Stanbic IBTC, and Vetiva, with United Capital as the lead. The African Finance Corporation is the global coordinator, with Constant Capital and Iron Capital serving as financial advisers.
3. Differentiation from Local FGN Bonds and Eurobonds
   • This domestic dollar bond is issued locally in dollars with a minimum investment of $10,000. Eurobonds, issued abroad in foreign currencies, require a minimum subscription of $200,000. The domestic bond offers a higher return (9.75%) compared to the 9.58% yield on the Federal Government’s $1.25 billion 2029 Eurobond.
4. Payment Method
   • Both capital and interest payments are made in dollars through the Nigerian banking system and electronic transfers.
5. Bank Verification Number (BVN)
   • Investors, including those in the diaspora, must provide their BVN for verification.

The bond presents an opportunity for investors to benefit from high returns while supporting national development projects.